Episode 457(212) Finances - part 3
This is Retirement Talk. I'm Del Lowery.
This is the third and last in a series on retirement and finances. I want to remind the podcast listener that I lay no claim to being a financial adviser. I am just a guy who has managed my finances well enough over 28 years to have some small tips to share.
I also want to say that I am in the middle of a month or so long road trip and have decided to travel lite. So I have only brought my iPad to record and prepare these next few episodes. The sound might not be what you, or I, am use to but it will have to do.
"When I step up to an ATM machine I expect to withdraw three or four hundred dollars. No exceptions". That is my retirement money mantra. It is also the extent of my interest in financial management.
Some people are very much fascinated by money. They like to accumulate it, count it, and spend it. I'm sure they have their reasons. It just isn't something that makes my day.
We have had a pretty much fixed income over our twenty-eight years of retirement. We also have pretty much fixed our expenses. We retired on a retirement plan put out by the State of Alaska in 1987. It was a 'special incentive package" approved by the state legislature designed to encourage older teachers to retire. At age 44 and 41 Brenda and I qualified as "older". a cost of living adjustment was included in the plan. Of course it has not even begun to keep up with the actual cost of living but it has increased over the years. Even at fifty dollars per month, per year, over a course of twenty years it amounts to an additional twelve thousand dollars per year increase. I really don't know what the increase has been. But I know it is enough to not be discounted.
Our money management method has not changed during our retirement years. Each month we send money to specific accounts: savings, car, house, and condo. They are different kinds of saving accounts or specific savings accounts.
The general saving account is for the expected but yet unpredictable expenses like those that come with owning a home. The water heater goes out, the furnace doesn't work, the roof needs repair, etc. We all know that these expenses are just as assured as taxes. Some times we dip into this account for special travel expenses or special gifts. So far there has always been enough there.
Our second savings account is for the car. I wish I could say that we don't own a car but we do. If you own a car it costs money. If not today, tomorrow. This fund lies untouched most of the year. But it always stands ready for new tires, trips to the mechanic, insurance and license. Our last use of it was when I tried to pull a tree branch out of a tree with a long rope tied to the bumper hitch. The limb broke and the rope snapped the piece of wood straight into the back hatch of the car. Eight hundred and seventy dollars please. Cars are not cheap.
The third savings account covers required housing expenses like taxes and insurance. Sometimes it builds enough to cover some minor repairs but it is usually budged to just cover the yearly fixed costs.
The fourth savings account covers our condo expenses in Vancouver. That means things like taxes and insurance and then any special condo dues that might be levied. Seems like they are always needing money for new carpeting in the hallways, new awnings, window washer supports, or something else. It isn't a lot of money but it has a way of jumping up to surprise us. We have to be prepared.
After these saving accounts are funded the remainder of each months income is available for daily expenses and whatever.
We don't budget for food, clothing and entertainment. We don't budget anything other than making sure the saving accounts are funded. We just spend whatever we have and if there is any left over at the end of the month it is carried over into the next month. We never charge anything. We may use a credit card for convenience sake but we always pay it off at the beginning of each month. If we don't have the money for something we don't buy it. I don't remember this happening. I guess we have adjusted our expectations to our financial situation.
We have never had to change this process over twenty eight years. I guess it has been effective. I know we spend a lot of money on coffee. We eat organic food most of the time and have wine with every dinner. We purchase whatever either of us want. Luckily, we don't have a lot of physical wants. Our values are more in the lines of time to do as we wish each day. That doesn't have a high price tag. We like to play music, paint, read, bike, hang out in coffee shops, and work on community projects. All of those are free. Perhaps they don't have much value to some people but they are what seem to satisfy and even excite us. We have escaped purchasing high maintain economic items like boats or RVs. We just never did desire either one.
This ends my little foray into the world of retirement and finance. These three episodes are only intended to provoke a little thought about what you may be doing and some other possibilities. They have worked for us. They might work for you. I still think the key to successful financing of retirement is to spend less than you take in.
This is Retirement Talk with something to think about.
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